TIDMTSG
RNS Number : 8223B
Trans-Siberian Gold PLC
25 September 2018
Trans-Siberian Gold plc
("TSG" or the "Company")
Interim Results for the six months ended 30 June 2018
Trans-Siberian Gold plc (TSG.LN) announces its unaudited interim
results for the period ended 30 June 2018.
Financial Highlights
-- Record H1 revenue generation of approximately $27.6 million (H1 2017: $18.8 million)
-- Profit before tax $3.2 million (H1 2017: $0.5 million)
-- EBITDA $8.8 million (H1 2017 $5.4 million)
-- Interim dividend of $1.0 million resulting in payment of
$0.009 per share (H1 2017: $0.036 per share)
Operational Highlights
-- Gold dore increased by 25% to 17,361 oz. (H1 2017: 13,897 oz.)
-- Refined gold production 20,698 oz. (H1 2017: 15,007 oz.)
-- Mine development 2,802 metres (H1 2017: 2,625 metres)
-- Asacha plant processed average 15,370 tonnes per month, 2.3% above H1 2017
-- Average gold grade: 6.2g/t (H1 2017: 5.1g/t)
-- Average gold selling price of $1,324/oz. (H1 2017: $1,237/oz.)
-- Cash cost per oz. gold sold $644 (H1 2017: $553)
Alexander Dorogov, CEO of TSG, commented:
"It is particularly pleasing to report record revenue for an
interim period and a return of higher grade ore (6.5-8 g/t) in
recent months. Our results in the first half of 2018 reflect the
actions taken to address some of the challenges we faced. We will
continue our efforts to improve operational performance and drive
further efficiencies at Asacha.
I am pleased to announce our fourth consecutive dividend which
underlines our commitment to deliver returns for shareholders. We
continue to make demonstrable progress and shareholders can look
forward to the remainder of the year with optimism."
Copies of the Company's Interim Report and Accounts will be
available on the Company's website: www.trans-siberiangold.com
Ends
Contacts: TSG
Stewart Dickson +44 (0) 7799 694195
Cantor Fitzgerald Europe +44 (0) 207 894 7000
David Porter
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ('MAR'). Upon the
publication of this announcement via Regulatory Information Service
('RIS'), this inside information is now considered to be in the
public domain.
Chief Executive Officer's Review
Operational Review
In the six months to 30 June 2018, the Asacha Gold Mine produced
20,698 oz. (H1 2017: 15,007 oz.) of refined gold and 46,152 oz. (H1
2017: 22,212 oz.) of refined silver. Our total cash cost of
$644/oz. (H1 2017: $553/oz.) remains competitive amongst our
industry peers globally.
The average realised gold price increased to $1,324/oz.,
compared to $1,237/oz. in H1 2017. Production of gold in dore
increased by 25% to 17,361 oz. (H1 2017: 13,897 oz.), silver in
dore increased by 110% to 42,118 oz. (H1 2017: 20,078 oz.).
The average processed ore gold grade was 6.2 g/t, representing a
22% increase above the H1 2017 average of 5.1g/t, with further
improvement in July (6.5 g/t) and August (7.9 g/t). Whilst this is
a significant year-on-year improvement, the processed gold grade
reflected the need to process some lower grade stockpile ore in
order to maintain high plant throughput. We are committed to
increasing the average gold grade and realise the potential of the
orebody. The preparation of new ore blocks is gradually catching up
with the stoping ore volume requirements. In H1 2018, stoping ore
accounted for 54% of the total ore volume delivered to the plant
(H1 2017: 43%).
The steps to address water ingress are on track. All of the
major equipment for the main pumping station at level 150m has been
delivered to the site. Construction works are progressing well both
in the mine and on the surface. Operational testing is being
conducted.
The gateway to the adit of Vein 25 is completed, providing
access to a new orebody. Decline development is scheduled for 2019
with stoping works to start in 2020 while mining operations of the
main deposit continue.
The Asacha plant processed 92,217 tonnes (a run-rate
significantly above its designed annual capacity of 150,000 tonnes)
and achieved 94.4% average gold recovery (H1 2017: 94.1%). We
continue to blend higher grade stoping ore with lower grade
stockpiled ore to ensure our processing capacity is fully
utilized.
Gold production in H2 2018 is expected to improve as the effects
of the installation of additional pumping equipment are felt.
Accordingly, the Company's total gold production guidance range of
36,000 - 40,000 oz. for 2018 remains unchanged (2017: 33,872 oz.).
The upper end of the range represents a year-on-year increase of
approximately 9% in total gold production.
Mining and production data for H1 2018 at the Asacha Gold Mine
is shown in the following table:
H1 H1 Year on year
Metric 2018 2017 % Change
---------------------- ------ ------ --------------
Mine development, m 2,802 2,625 6.7%
------ ------ --------------
Ore extracted, tonnes 95,518 93,693 1.9%
------ ------ --------------
Ore processed, tonnes 92,217 90,177 2.3%
------ ------ --------------
Grade, gold, g/t 6.2 5.1 21.6%
------ ------ --------------
Grade, silver, g/t 19.0 9.0 111.1%
------ ------ --------------
Recovery, gold, % 94.4 94.1 0.3%
------ ------ --------------
Recovery, silver, % 76.4 76.3 0.1%
------ ------ --------------
Gold in dore (oz.) 17,361 13,897 24.9%
------ ------ --------------
Silver in dore (oz.) 42,118 20,078 109.8%
------ ------ --------------
Gold refined (oz.) 20,698 15,007 37.9%
------ ------ --------------
Silver refined (oz.) 46,152 22,212 107.8%
------ ------ --------------
Gold sold (oz.) 20,472 14,954 36.9%
------ ------ --------------
Silver sold (oz.) 30,790 21,845 40.9%
------ ------ --------------
Gold price, $/oz. 1,324 1,237 7.0%
---------------------- ------ ------ --------------
Silver price, $/oz. 16.9 16.5 2.4%
---------------------- ------ ------ --------------
Employees and Safety
Our employees and their safety are our highest priority.
At 30 June 2018 TSG's subsidiary ZAO Trevozhnoye Zarevo ("TZ")
employed 699 staff in Kamchatka (31 December 2017: 711).
The Group adopts a continuous improvement approach to advance
health and safety standards at Asacha. During the Period, employees
have attended various training courses, including labour and fire
safety, accident response and emergency management, electric safety
and the safety of hydro-technical facilities.
Unfortunately, on 20 April 2018 there was a fatal accident in
the underground mine. A miner fell into a pipeway passage in the
upraise from a pump chamber at level 100 to level 150.
Investigation procedures involving the regulatory authorities and
TZ staff have commenced. TZ is providing support to the miner's
family.
During H1 2018 no other injuries were reported.
Asacha Mining Licence
In June 2018, and in line with expectations, the Russian State
Subsoil Agency ("Rosnedra") approved TZ's application to extend the
existing mining licence at the Asacha Gold Mine for a further
six-year period. The extended mining licence will expire on 31
December 2024.
Financial Performance
H1 2018 generated record revenue of approximately $27.6 million
(H1 2017: $18.8 million) and a profit before tax of $3.2 million
(H1 2017: $0.5 million). The Group will continue to seek
efficiencies to reduce our key cost metrics and thereby improve our
financial performance wherever practicable.
Interim Dividend
In line with our commitment to make attractive and sustainable
dividend payouts to shareholders, I am pleased to report that the
Board has declared an interim 2018 dividend of 0.009 US cents per
share equal to approximately $1.0 million (H1 2017: $4.0
million).
The Board reviews its dividend policy on a regular basis.
Board & Senior Management
In line with the Company's succession plan, the Board of
Directors appointed Alexander Dorogov as Chief Executive Officer in
July 2018. Mr. Dorogov succeeded Dmitry Khilov who had been CEO
since October 2009 and led TSG through significant moments in its
history including bringing the Asacha Gold Mine into production. Mr
Dorogov was formerly the Company's Chief Financial Officer.
During H1 2018 and afterwards, a number of senior management
appointments have also been made.
In March 2018, Konstantin Kornienko was appointed as Managing
Director of TZ. Mr. Kornienko has more than 15 years of experience
working at gold-processing plants, of which a decade has been in
managerial positions. His previous experience includes building and
operating gold-processing plants at Pervenets-Verninskoe (Polyus),
Vysochaishy (GV Gold) and Severnoe Zoloto (Kinross Gold). Since
2011 he has been responsible for the gold-processing plant at the
Asacha Gold Mine.
In June 2018, Alexey Malevanov was appointed as Chief Engineer
of TZ. Mr. Malevanov has more than 15 years of experience in the
mining industry, mainly in managerial positions in underground
mining operations located in Far-East Russia. Prior to joining TZ,
he was Deputy Executive Director at Berezitovy Mine in the Amur
Region (Nordgold) between 2016 and 2018. He was Deputy Director of
the Severny Rudnik mine (Norilsk Nickel) between 2014 and 2016, and
Chief Engineer of Irtysh Rudnik (Kazakhstan, Kazakhmys Corporation)
between 2011 and 2013. His previous experience includes managerial
positions at the Julietta, Karalveem and Mnogovershinnoe mines.
In August 2018, Eugene Antonov was appointed as Chief Operating
Officer of the Company's wholly owned subsidiary Trans-Siberian
Gold Management LLC ("TSGM"). Mr. Antonov has more than 20 years of
experience in the mining industry, mainly in managerial positions
with responsibility for mine site operations and finance. In his
previous appointments, he has established a track record of leading
change, financial management and harnessing technology to drive
operational efficiencies. Most recently he spent 11 years at
Kinross Gold Corporation and was an integral part of the leadership
team at the Kupol Mine in Far East Russia which generated the
largest annual cash flow and achieved the lowest operating cost
across the Kinross group. Between 1999 and 2007, he was employed at
Bema Gold Corporation in Canada in various executive finance roles,
including Director of Finance, until its acquisition by Kinross.
His previous experience includes managerial positions at Teck in
Canada.
These key leadership appointments are focused on driving
operational efficiencies and improvements.
Outlook and priorities
Our number one priority is to enhance our existing mining
operations at Asacha.
At the same time, we are well positioned to exploit future
growth opportunities. We have a strong investment case and believe
our commitment to an attractive and stable dividend pay-out should
increase interest in the Company's shares and the Company more
widely.
We are committed to acting in a responsible manner, protecting
the environment, safeguarding the welfare of our employees and
maintaining good relationships with the communities in which we
operate.
Financial Review
Results
H1 2018 generated record revenue of approximately $27.6 million
(H1 2017: $18.8 million).
Sales of 20,472 oz. of refined gold (H1 2017: 14,954 oz.) and
30,790 oz. of refined silver (H1 2017: 21,845 oz.) were $27.1
million and $0.5 million respectively (H1 2017: $18.4 million and
$0.4 million).
Average realised prices were $1,324 per oz. gold and $17 per oz.
silver (H1 2017 $1,233 per oz. gold and $17 per oz. silver).
Cost of sales was $19.9 million (H1 2017: $13.3million),
reflecting the 37% increase of gold sold and 9% increase in the
cost of sales per oz.
Cash cost per oz. gold excluding depletion, net of the silver
credit and excluding royalty, was $644 (H1 2017: $553). The
variance is attributable to higher fuel prices and consumption as
well as higher staff costs. Depletion of mining properties is
normally treated as a non-cash cost, however the Group has
previously also reported cash cost per oz. including depletion
because, in the early years of production, some mining properties
costs were amortised over short periods. The Group now only reports
cash cost per oz. excluding depletion.
The Group recorded an operating profit for the period of $ 3.6
million (H1 2017: $1.3 million), driven by higher volumes of gold
sold (H1 2018: 20,472 oz. vs. H1 2017: 14,954 oz.) and higher
average selling price (H1 2018: $1,324/oz. vs. H1 2017:
$1,237/oz.).
Total administrative expenses were stable at $3.9 million (H1
2017: $3.9 million).
Finance expense reduced to $0.5 million (H1 2017: $0.9 million),
reflecting the lower interest rate of 6.2% on the loan facilities
with VTB Bank which were entered into in June 2017. The Group's
previous loan facilities had an average interest rate of
approximately 10%.
The profit for the period was $2.6 million (H1 2017: $29,000)
net of exchange gains of $0.3 million (H1 2017: $0.2 million). The
profit for the period included a tax charge of $0.6 million (H1
2017: $0.5 million).
Financial Position
Total equity was $78.3 million at 30 June 2018 compared to $78
million at 31 December 2017.
Capital expenditure amounted to $10.2 million (H1 2017: $8.7
million) relating primarily to active mine development at level
100m to secure stoping mining in 2019-2020 and achieving strategic
goal of plant feed with high-grade ore as well as construction of
underground pumping station at level 150m to address water
ingress.
Ore stocks are stated net of impairment provisions of $4.5
million (31 December 2017: $4.0 million), representing the
difference between the ore stockpile's expected net realisable
value at a gold price of $1,250/oz. (H1 2017: $1,243/oz.) and cost,
including processing, refining and royalties.
Cash generated from operations before working capital changes
has increased from $5.7 million in H1 2017 to $12.3 million in H1
2018 reflecting the record level of revenue generated in the
period. The cash balance reduced from $7.5 million at 31 December
2017 to $5.7 million mainly due to the repayment of borrowings.
Loans and borrowings reduced from $19.8 million at 31 December
2017 to $16.0 million at 30 June 2018 mostly due to $4.7 million
repayment in the period off-set by $1.0 million of a further
draw-down from the available facility.
Events after the reporting date
As previously stated, the Company executed its CEO succession
plan with the appointment of Mr. Dorogov and other senior
management changes.
There were no other significant events after the end of the
reporting period.
Alexander Dorogov
Chief Executive Officer
25 September 2018
Consolidated Statement of Comprehensive Income
for the period ended 30 June 2018
6 months 6 months 12 months
to to to
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
Notes $'000 $'000 $'000
Revenue 9 27,605 18,804 43,447
----- ---------- ---------- ------------
Cost of sales (19,953) (13,283) (30,737)
----- ---------- ---------- ------------
Ore stock inventory impairment (445) (605) (1,862)
----- ---------- ---------- ------------
Gross profit 7,207 4,916 10,848
----- ---------- ---------- ------------
Administrative expenses (3,905) (3,937) (7,392)
----- ---------- ---------- ------------
Other operating income 30 155 411
----- ---------- ---------- ------------
Foreign exchange on operating
activities 237 160 432
----- ---------- ---------- ------------
Operating profit 3,569 1,294 4,299
----- ---------- ---------- ------------
Finance income 15 68 97
----- ---------- ---------- ------------
Finance expense (486) (858) (1,217)
----- ---------- ---------- ------------
Foreign exchange on financing
activities 59 39 (143)
----- ---------- ---------- ------------
Profit before taxation 3,157 543 3,036
----- ---------- ---------- ------------
Income tax on profit (600) (514) (520)
----- ---------- ---------- ------------
Profit for the period 2,557 29 2,516
----- ---------- ---------- ------------
Total comprehensive income
for the period 2,557 29 2,516
----- ---------- ---------- ------------
Total comprehensive income for the
period is attributable to:
---------- ---------- ------------
- Owners of the parent company 2,557 29 2,516
----- ---------- ---------- ------------
Profit per share attributable
to the owners of the parent
company (expressed in cents)
----- ---------- ---------- ------------
- Basic and diluted 10 2.32 0.03 2.29
----- ---------- ---------- ------------
Consolidated Statement of Financial Position
as at 30 June 2018
Restated 31 December
30 June 2018 30 June 2017 2017
Unaudited Unaudited Audited
Notes $'000 $'000 $'000
Non-current assets
----- ------------ ------------- -----------
Intangible assets 501 2,179 501
----- ------------ ------------- -----------
Property, plant and equipment 5 88,412 80,828 84,125
----- ------------ ------------- -----------
Inventories 6 709 4,681 1,166
----- ------------ ------------- -----------
89,622 87,688 85,792
----- ------------ ------------- -----------
Current assets
----- ------------ ------------- -----------
Inventories 6 9,882 7,313 12,884
----- ------------ ------------- -----------
Trade and other receivables 4,138 2,529 2,484
----- ------------ ------------- -----------
Current income tax receivable - - 281
----- ------------ ------------- -----------
Cash and cash equivalents 5,704 9,649 7,491
----- ------------ ------------- -----------
19,724 19,491 23,140
----- ------------ ------------- -----------
Total assets 109,346 107,179 108,932
----- ------------ ------------- -----------
Current liabilities
----- ------------ ------------- -----------
Trade and other payables (9,391) (5,615) (5,730)
----- ------------ ------------- -----------
Current income tax liabilities (180) (295) -
----- ------------ ------------- -----------
Borrowings 7 (1,181) (1,948) (5,031)
----- ------------ ------------- -----------
(10,752) (7,858) (10,761)
----- ------------ ------------- -----------
Non-current liabilities
----- ------------ ------------- -----------
Borrowings 7 (14,800) (14,960) (14,800)
----- ------------ ------------- -----------
Provisions (1,327) (4,090) (1,327)
----- ------------ ------------- -----------
Deferred tax liability (4,189) (736) (4,028)
----- ------------ ------------- -----------
(20,316) (19,786) (20,155)
----- ------------ ------------- -----------
Total liabilities (31,068) (27,644) (30,916)
----- ------------ ------------- -----------
Net assets 78,278 79,535 78,016
----- ------------ ------------- -----------
Capital and reserves attributable
to owners of the Company
----- ------------ ------------- -----------
Share capital 8 18,988 18,988 18,988
----- ------------ ------------- -----------
Retained earnings 59,290 60,547 59,028
----- ------------ ------------- -----------
78,278 79,535 78,016
----- ------------ ------------- -----------
Consolidated Statement of Changes in Equity
for the period ended 30 June 2018
Retained
Share capital earnings Total equity
Notes $'000 $'000 $'000
At 1 January 2017 (restated)
----- ------------- --------- ------------
Audited 18,988 60,518 79,506
----- ------------- --------- ------------
Profit and total comprehensive
income for the period - 29 29
----- ------------- --------- ------------
At 30 June 2017 (restated)
----- ------------- --------- ------------
Unaudited 18,988 60,547 79,535
----- ------------- --------- ------------
Profit and total comprehensive
income for the period - 2,487 2,487
----- ------------- --------- ------------
Dividends (4,006) (4,006)
----- ------------- --------- ------------
At 31 December 2017
----- ------------- --------- ------------
Audited 18,988 59,028 78,016
----- ------------- --------- ------------
Profit and total comprehensive
income for the period - 2,557 2,557
----- ------------- --------- ------------
Dividends 11 - (2,295) (2,295)
----- ------------- --------- ------------
At 30 June 2018
----- ------------- --------- ------------
Unaudited 18,988 59,290 78,278
----- ------------- --------- ------------
Consolidated Statement of Cash Flows
for the period ended 30 June 2018
6 months 6 months 12 months
to to to
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
Notes $'000 $'000 $'000
Cash flows from operating activities
----- ---------- ---------- ------------
Cash generated from operations 12 12,300 5,704 11,982
----- ---------- ---------- ------------
Interest paid (590) (810) (1,333)
----- ---------- ---------- ------------
Income taxes paid - (15) (475)
----- ---------- ---------- ------------
Net cash inflow from operating
activities 11,710 4,879 10,174
----- ---------- ---------- ------------
Investing activities
----- ---------- ---------- ------------
Purchase of intangible assets - - (501)
----- ---------- ---------- ------------
Purchase of property, plant and
equipment (9,507) (8,299) (14,192)
----- ---------- ---------- ------------
Interest received 15 68 97
----- ---------- ---------- ------------
Net cash used in investing activities (9,492) (8,231) (14,596)
----- ---------- ---------- ------------
Financing activities
----- ---------- ---------- ------------
Proceeds from new bank borrowings 1,035 16,501 19,500
----- ---------- ---------- ------------
Repayment of bank borrowings (4,700) (16,500) (16,500)
----- ---------- ---------- ------------
Repayment of finance leases (150) (106) (314)
----- ---------- ---------- ------------
Dividends paid - - (4,006)
----- ---------- ---------- ------------
Net cash used in financing activities (3,815) (105) (1,320)
----- ---------- ---------- ------------
Net decrease in cash and cash equivalents (1,597) (3,457) (5,742)
----- ---------- ---------- ------------
Cash and cash equivalents at beginning
of period 7,491 13,097 13,097
----- ---------- ---------- ------------
Exchange (losses)/gains on cash
and cash equivalents (190) 9 136
----- ---------- ---------- ------------
Cash and cash equivalents at end
of period 5,704 9,649 7,491
----- ---------- ---------- ------------
Notes to the consolidated interim financial information
for the period ended 30 June 2018
1. General information
Trans-Siberian Gold plc (the Company) is a UK-based resources
company, with the objective of acquiring and developing a portfolio
of quality gold-mining assets in Russia.
The Company is a public limited company, incorporated and
domiciled in the United Kingdom, and has subsidiaries based in the
Russian Federation. The Company's registered office is 39 Parkside
Cambridge CB1 1PN United Kingdom. The registered number of the
Company is 1067991. The Company's shares are traded on the AIM
Market of the London Stock Exchange.
2. Basis of preparation
The consolidated interim financial information has been prepared
using policies based on International Financial Reporting Standards
(IFRS and IFRIC interpretations) issued by the International
Accounting Standards Board ("IASB") as adopted for use in the EU.
It does not include all disclosures that would otherwise be
required in a complete set of financial statements and should be
read in conjunction with the 2017 Annual Report.
The consolidated interim financial information for the six
months ended 30 June 2018 and 30 June 2017 is unreviewed and
unaudited and does not constitute statutory accounts as defined in
Section 435 of the Companies Act 2006. The comparative financial
information for the year ended 31 December 2017 has been derived
from the statutory financial statements for that year. Statutory
financial statements for the year ended 31 December 2017 were
approved by the Board of Directors on 29 May 2018 and filed with
the Registrar of Companies. The Independent Auditors' Report on
those financial statements was unqualified.
2.1 Going concern
The Group's operations are cash generative and management
tightly control the level of committed expenditure to ensure that
the Group has sufficient resources available to meet its
liabilities as they fall due. Regular cash forecasts are reviewed
to assess the potential impact of factors such as changes in
commodity prices, production rates and the timing of capital
expenditure.
The Group has reported an operating profit for the period of
$3.6 million. The Directors have reviewed the Group's cash flow
forecast for the period to 31 December 2019 and they believe that,
taking account of reasonably possible changes in commodity prices,
trading performance and expenditure and scheduled repayment of bank
loan facilities, the Group has adequate resources to continue in
operational existence for the foreseeable future, wherefore the
Directors are confident that the Group will continue as a going
concern and have prepared the financial statements on that
basis.
2.2 Critical accounting judgements and uncertainties
The preparation of interim financial information requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing this consolidated interim financial information,
the significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those that applied to the consolidated
financial statements for the year ended 31 December 2017.
2.3 New standards, interpretations and amendments adopted by the
Group
The accounting policies adopted in the preparation of the
consolidated interim financial information are consistent with
those followed in the preparation of the Group's annual
consolidated financial statements for the year ended 31 December
2017, except for the adoption of new standards effective as of 1
January 2018. However, the Group did not have to change its
accounting policies or make retrospective adjustments as a result
of adopting these new standards.
The following new standards and interpretations became effective
on 1 January 2018 and have been adopted by the Group:
IFRS 15 has replaced IAS 18 Revenue and IAS 11 Construction
Contracts as well as various interpretations previously issued by
the IFRS Interpretations Committee. The Group's accounting policies
have remained unchanged from those previously disclosed in the 2017
annual financial statements.
IFRS 9 has replaced IAS 39 Financial Instruments: Recognition
and Measurement. All financial assets of the Group continue to be
classified and measured at amortised cost. There are no material
financial assets subject to the expected credit loss model defined
within IFRS 9, except for cash. The level of credit risk that the
Group is exposed to has not given rise to material allowances
within the expected credit loss model.
3. Restatement
During 2017 accounting errors were identified that required an
adjustment of balances reported at 31 December 2016. This effected
the opening financial position of the comparative period in this
consolidated interim financial information.
These errors principally related to the earlier than intended
depreciation of certain plant and machinery assets acquired under
finance lease arrangements and the incorrect posting of payments
made on initial inception of these arrangements as foreign exchange
losses.
The errors have been corrected by restating each of the affected
financial statement line items for the prior period, as
follows:
Consolidated statement of financial position
At 30 June 2017
As previously
reported Adjustments As restated
$'000 $'000 $'000
------------- ----------- -----------
Non-current assets 87,413 275 87,688
------------- ----------- -----------
Current assets 19,071 420 19,491
------------- ----------- -----------
Current liabilities (7,858) - (7,858)
------------- ----------- -----------
Non-current liabilities (19,762) (24) (19,786)
------------- ----------- -----------
Net assets 78,864 671 79,535
------------- ----------- -----------
Share capital 18,988 - 18,988
------------- ----------- -----------
Retained earnings 59,876 671 60,547
------------- ----------- -----------
78,864 671 79,535
------------- ----------- -----------
4. Segment information
The Group's operations are entirely focused on gold production
and exploration and development activities within the Russian
Federation, with its corporate head office in the UK. The operating
segment has been identified on the basis of internal reports about
the components of the Group provided to the chief operating
decision makers. The chief operating decision makers have been
identified as the Chief Executive Officer and the non-executive
board members.
The Group has one reportable segment, being operations in
Russia. The operating results of this segment are regularly
reviewed by the Group's chief operating decision makers in order to
make decisions about the allocation of resources and to assess
their performance. With the exception of $1.1 million corporate
costs (H1 2017: $2.2 million), the numbers in the primary
statements reflect the results of the sole operating segment.
5. Property, plant and equipment
Plant Assets
Mining and Office Motor under
properties Buildings machinery equipment vehicles construction Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Cost
----------- --------- ---------- ---------- --------- ------------- -------
At 1 January 2017 (restated) 65,271 79,028 20,161 451 3,176 1,144 169,231
----------- --------- ---------- ---------- --------- ------------- -------
Additions 6,786 209 402 11 920 421 8,749
----------- --------- ---------- ---------- --------- ------------- -------
Disposals - - (111) (4) (51) - (166)
----------- --------- ---------- ---------- --------- ------------- -------
At 30 June 2017 (restated) 72,057 79,237 20,452 458 4,045 1,565 177,814
----------- --------- ---------- ---------- --------- ------------- -------
Additions 609 578 1,027 6 2,032 2,821 7,073
----------- --------- ---------- ---------- --------- ------------- -------
Disposals - - (1,315) (11) (459) - (1,785)
----------- --------- ---------- ---------- --------- ------------- -------
Transfers - 94 400 - - (494) -
----------- --------- ---------- ---------- --------- ------------- -------
Transferred from intangible
assets 2,106 - - - - - 2,106
----------- --------- ---------- ---------- --------- ------------- -------
At 31 December 2017 74,772 79,909 20,564 453 5,618 3,892 185,208
----------- --------- ---------- ---------- --------- ------------- -------
Additions 6,621 200 951 - 78 2,330 10,180
----------- --------- ---------- ---------- --------- ------------- -------
Disposals - - (443) (1) - - (444)
----------- --------- ---------- ---------- --------- ------------- -------
Transfers - 94 400 - - (494) -
----------- --------- ---------- ---------- --------- ------------- -------
At 30 June 2018 81,393 80,203 21,472 452 5,696 5,728 194,944
----------- --------- ---------- ---------- --------- ------------- -------
Depreciation
----------- --------- ---------- ---------- --------- ------------- -------
At 1 January 2017 (restated) 34,782 43,366 11,203 441 2,371 183 92,346
----------- --------- ---------- ---------- --------- ------------- -------
Depreciation charge 1,260 2,689 618 4 125 - 4,696
----------- --------- ---------- ---------- --------- ------------- -------
Disposals - - (1) (4) (51) - (56)
----------- --------- ---------- ---------- --------- ------------- -------
At 30 June 2017 (as restated) 36,042 46,055 11,820 441 2,445 183 96,986
----------- --------- ---------- ---------- --------- ------------- -------
Depreciation charge 1,754 2,719 973 4 294 - 5,744
----------- --------- ---------- ---------- --------- ------------- -------
Disposals - (1,177) (11) (459) - (1,647)
----------- --------- ---------- ---------- --------- ------------- -------
At 31 December 2017 37,796 48,774 11,616 434 2,280 183 101,083
----------- --------- ---------- ---------- --------- ------------- -------
Depreciation charge 1,986 2,719 642 3 427 - 5,777
----------- --------- ---------- ---------- --------- ------------- -------
Disposals - - (327) (1) - - (328)
----------- --------- ---------- ---------- --------- ------------- -------
At 30 June 2018 39,782 51,493 11,931 436 2,707 183 106,532
----------- --------- ---------- ---------- --------- ------------- -------
Carrying amount
----------- --------- ---------- ---------- --------- ------------- -------
At 1 January 2017 (restated) 30,489 35,662 8,958 10 805 961 76,885
----------- --------- ---------- ---------- --------- ------------- -------
At 30 June 2017 (restated) 36,015 33,182 8,632 17 1,600 1,382 80,828
----------- --------- ---------- ---------- --------- ------------- -------
At 31 December 2017 36,976 31,135 8,948 19 3,338 3,709 84,125
----------- --------- ---------- ---------- --------- ------------- -------
At 30 June 2018 41,611 28,710 9,541 16 2,989 5,545 88,412
----------- --------- ---------- ---------- --------- ------------- -------
Mining properties assets relate to the Asachinskoye (Asacha)
mining licence held by the Company's subsidiary ZAO Trevozhnoye
Zarevo (TZ).
Capitalisation of depreciation
-- $526,000 (H1 2017: $309,000) of the depreciation charge is
included in additions to mining properties
-- $23,000 (H1 2017: $35,000) of the depreciation charge is
included in additions to assets under construction
-- $243,000 (H1 2017 $662,000) of the depreciation charge is charged to inventories
6. Inventories
30 June 2018 30 June 2017
31 December
$'000 $'000 2017 $'000
Non-current:
------------ ------------ -----------
Ore stocks 5,183 7,452 5,194
------------ ------------ -----------
Less accumulated provision (4,474) (2,771) (4,028)
------------ ------------ -----------
709 4,681 1,166
------------ ------------ -----------
Current:
------------ ------------ -----------
Finished gold 58 - -
------------ ------------ -----------
Finished silver 55 - -
------------ ------------ -----------
Gold in progress 1,890 1,739 4,858
------------ ------------ -----------
Silver in progress 315 37 1,418
------------ ------------ -----------
Ore stocks 781 520 505
------------ ------------ -----------
Raw materials and consumables 6,783 5,017 6,103
------------ ------------ -----------
9,882 7,313 12,884
------------ ------------ -----------
10,591 11,994 14,050
------------ ------------ -----------
Ore stocks' impairment provision reflects the difference between
their expected net realisable value at a gold price of $1,250/oz.
(H1 2017: $1,243/oz.), and cost, including processing, refining and
royalties. Gold in progress, silver in progress and ore stocks
include mining properties depletion $243,000 (H1 2017:
$662,000).
7. Borrowings
Restated
30 June
30 June 2018 2017
31 December
$'000 $'000 2017 $'000
Current:
------------ --------- -----------
Bank borrowings 1,053 1,718 4,743
------------ --------- -----------
Finance lease obligations 128 230 288
------------ --------- -----------
1,181 1,948 5,031
------------ --------- -----------
Non-current:
------------ --------- -----------
Bank borrowings 14,800 14,800 14,800
------------ --------- -----------
Finance lease obligations - 160 -
------------ --------- -----------
14,800 14,960 14,800
------------ --------- -----------
15,981 16,908 19,831
------------ --------- -----------
Movement in borrowings is analysed as follows:
Restated
30 June 31 December
30 June 2018 2017 2017
$'000 $'000 $'000
At beginning of period 19,831 16,755 16,755
------------ --------- -----------
Increase in borrowings 1,035 16,501 19,500
------------ --------- -----------
Repayment of borrowings and accrued
interest (4,706) (16,507) (16,507)
------------ --------- -----------
Release of debt issue costs - 221 221
------------ --------- -----------
Net movement in finance leases (179) (62) (138)
------------ --------- -----------
At end of period 15,981 16,908 19,831
------------ --------- -----------
On 19 June 2017, the Company's wholly owned subsidiary TZ
entered into an agreement with VTB Bank for a $15 million loan
facility for a 5-year term, repayable in equal amounts quarterly
with the first repayment effective seven calendar quarters after
initial drawdown.
On 21 June 2017, TZ entered into a further agreement with VTB
Bank for an additional $5 million debt facility for a 3-year term,
repayable on the loan expiry date.
Both loan facilities bear annual interest at 6.2% and are
secured against the equity and fixed assets of TZ only.
Additionally, TZ was required to enter into an exclusive gold sales
agreement with VTB Bank, which became effective from January
2018.
The new facilities were used to repay TZ's loans with Sberbank
amounting to $16.5 million and to provide additional funds for
working capital and other corporate purposes.
8. Share capital
Share capital at 30 June 2018 amounted to $18.9 million (31
December 2017: $18.9 million). During the period, no ordinary
shares in the Company were issued.
9. Revenue
6 months 6 months 12 months
to 30 June to 30 June to 31 December
2018 2017 2017
$'000 $'000 $'000
Revenue analysed by product:
----------- ----------- ---------------
Gold 27,086 18,443 42,691
----------- ----------- ---------------
Silver 519 361 756
----------- ----------- ---------------
27,605 18,804 43,447
----------- ----------- ---------------
10. Earnings per share
The calculation of basic profit per 10p ordinary share is based
on the retained profit for the period of $2,557,000 (H1 2017:
$29,000) and on 110,053,073 (H1 2017: 110,053,073) ordinary shares,
being the weighted average number of ordinary shares in issue and
ranking for dividends during the year.
The Group had no dilutive potential ordinary shares in either
periods that would serve to reduce the profit per ordinary share.
There is therefore no difference between the basic and diluted
profit per share for either year.
11. Dividends paid and proposed
A final dividend of $0.021 per ordinary share, equivalent to
approximately $2.3 million, that relates to the period to 31
December 2017 was paid on 25 July 2018.
An interim dividend of $0.009 per ordinary share was declared by
the Board of directors on 25 September 2018. It is payable on 26
October 2018 to shareholders who are on the register at 05 October
2018. This interim dividend, amounting to $1 million, has not been
recognised as a liability in this interim financial information. It
will be recognised in shareholders' equity in the year to 31
December 2018.
12. Cash generated from operations
6 months 6 months 12 months
12 December
30 June 2018 30 June 2017 2017
$'000 $'000 $'000
Profit for the period after tax 2,557 29 2,516
------------- ------------- ------------
Adjustments for:
------------- ------------- ------------
Taxation charged 600 514 520
------------- ------------- ------------
Finance expense 486 858 1,217
------------- ------------- ------------
Finance income (15) (68) (97)
------------- ------------- ------------
Loss on disposal of property, plant
and equipment 116 110 248
------------- ------------- ------------
Foreign exchange differences 159 (39) (152)
------------- ------------- ------------
Depreciation of property, plant and
equipment 4,985 3,690 7,964
------------- ------------- ------------
Impairment of ore stocks 445 605 1,862
------------- ------------- ------------
Movements in working capital:
------------- ------------- ------------
Decrease/(increase) in inventories 3,254 (748) (2,882)
------------- ------------- ------------
Increase in trade and other receivables (1,654) (697) (1,333)
------------- ------------- ------------
Increase in trade and other payables 1,367 1,450 2,119
------------- ------------- ------------
Cash generated from operations 12,300 5,704 11,982
------------- ------------- ------------
13. Contingencies
Management have identified a potential income tax exposure in
respect of the taxation of intragroup interest. The directors have
obtained specialist advice in this respect and believe that prior
years' available tax losses should be sufficient to shelter any
possible tax liability. No provision in relation to this possible
exposure has been recognised in these consolidated financial
statements as the likelihood of a liability arising is considered
to be remote.
The Company's wholly owned subsidiary TZ has received a claim
from the Federal Service for Supervision of Use of Natural
Resources, RosPrirodNadzor ("RPN") over the classification of
payments for disposal of waste materials following a site
inspection in 2016. Having taken appropriate advice, management
believe that TZ has a strong legal position and as such, dispute
the claim made by RPN. The claim could potentially amount to
approximately $2.1 million.
14. Events after the reporting date
There were no significant events after the end of the reporting
period.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LIFLEAVIEFIT
(END) Dow Jones Newswires
September 25, 2018 02:02 ET (06:02 GMT)
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